M/S SAIMANGALA ENTERPRISES vs. THE REGIONAL PROVIDENT FUND

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 4TH DAY OF JULY 2012 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR WRIT PETITION NO.1766/2012(L-PF) BETWEEN: M/s.Saimangala Enterprises Bharat Gas Distributors, No.190, Hegganahalli Main Road, Peenya 2nd Stage, Bangalore-560 091 Represented by its Proprietrix Smt.Hanumi Bai ... PETITIONER (By Sri.N.S.Narasimha Swamy,Advocate) AND: The Regional Provident Fund Commissioner-II, Regional Office (RO) Peenya, S(1)F, 1st Cross, 1st Stage, Peenya, Bangalore-560 058. ... RESPONDENT (By Smt.Nandita Haldipur, Advocate) This writ petition is filed under Articles 226 and 227 of the Constitution of India praying to quash/set aside the order dated 21.7.2009 passed by the respondent which is produced vide Annexure- A Etc. This Writ Petition coming on for orders this day, the Court made the following:

2 O R D E R Petitioner has called in question the order dated 21.7.2009 at Annexure-A passed by the respondent herein, whereunder petitioner establishment has been brought under the purview of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘Act’ for short) on the ground that employees strength exceeds 20 and as such, Section 1(3)(a) of the Act is attracted. 2. Facts in brief leading to filing of this Writ Petition are as under: Enforcement Officer of the Provident Fund Organisation visited the petitioner – establishment on 24.4.2007 in order to ascertain and find out as to whether the establishment has employed more than 20 persons and if so why it has not been brought under the coverage of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. At the time of inspection by Enforcement

3 Officer and while conducting survey, officials present in the petitioner establishment were called upon to produce the records for the current period as well as earlier period like the employees attendance register, wage registers and said registers were not produced on the ground that it was with their auditor and as such, the enforcement authorities called upon the Manager of the establishment to disclose the name of the employees working in the establishment. As per the Enforcement Officer’s report dated 24.4.2007, the Manager is said to have given names of 22 persons and for having furnished those names, signatures of the persons found at the establishment are obtained. Thereafter, petitioner establishment was issued notice of enquiry being conducted u/s.7A of the Act and petitioner establishment was called upon to produce the records by notice dated 24.4.2007. Again, one more notice was issued on 23.5.2007 and subsequently, the matter was adjourned from time to time and on 26.11.2008 petitioner is said to

4 have furnished in all nine documents. After hearing the petitioner and considering the material produced, the respondent passed an order on 30.5.2009 determining that petitioner establishment is rightly covered under the act with effect from 1.3.2007 with a direction to the establishment to comply with the provisions of the Act since the date of coverage. Aggrieved by this order, petitioner filed an appeal before the Employees’ Provident Fund Appellate Tribunal, New Delhi in ATA No.683(6) 2009. In the said appeal proceedings, the appellant has filed the affidavits of three persons namely Sriyuths: (1) Hema Naik, (2) B.Sunil; and (3) Ramachandra And the certificate of Enrolment Officer issued by the Karnataka State Bar council to Sri M.R. Onkarappa by contending that they are not the employees of the petitioner establishment and hence their names have been improperly included in the list prepared by the Enforcement Officer on 24.4.2007. After considering the arguments of the

5 learned advocates appearing for the parties, the Appellate Tribunal rejected the appeal and affirmed the order passed by the respondent herein. Aggrieved by this order, petitioner is before this court questioning both the orders. 3. Heard Sri N.S. Narasimha, learned counsel appearing for petitioner and Smt Nandita Haldipur, learned counsel appearing for respondent. Perused the original records made available by the learned counsel appearing for respondent. 4. It is the contention of Sri Narasimhaswamy that respondent erred in not taking into consideration the entire documents namely the attendance register as also the bills raised by Sri Onkarappa, who was an Advocate cum auditor and consultant of the petitioner establishment which clearly go to show that he was not an employee of the petitioner establishment and non consideration of these vital documents has resulted in the impugned orders being passed against the

6 petitioners bringing within the coverage of EPF & MP Act and contends that said finding is contrary to records and seeks for setting aside the same. 5. He would further contend that names shown in the Enforcement Officer’s report dated 24.4.2007 is not factually correct and to establish or to substantiate said contention of the petitioner affidavits were filed before the appellate authority and same has not been taken into consideration resulting in the impugned order namely the order of the Appellate Tribunal being passed and as such, he contends that the same is liable to be set aside. He would further contend that there is no proper discussion in the order passed by the respondent dated 21.7.2009 namely there is no discussion with regard to the attendance register, wage register produced by the petitioner and on account of this lacuna, impugned order is liable to be quashed. He would also submit the names of Mr.Ramachandra and Mr.Suresh are included in the rolls who are in no way

7 connected to the establishment and these aspects have not been considered by the respondent authority or the appellate authority and as such, he prays for allowing the Writ Petition by quashing the impugned order and by way of alternate plea he would submit that respondent authority may be directed to reconsider the matter afresh with reference to the documents produced by the petitioner before the said authority namely the attendance register and the wage register and give a specific finding on the said issue. 6. Per contra, Smt. Nandita Haldipur, learned counsel appearing for respondent would support the order passed by the respondent which came to be affirmed by the Appellate Tribunal and contends that the reasoning given in the said orders are in the paramateria with the records produced by the petitioner and impugned order does not call for interference. She would also contend that petitioner has never co-operated in the enquiry proceedings and was avoiding and evading to appear

8 before the authorities and only when the principal employer namely Bharath Petrol Corporation Ltd., was issued with a notice, petitioner appeared and thereafter petitioner produced some of the records which has been considered by adjudicating authority and same has also been properly analysed by it and as such, she contends that there is no infirmity in the order passed. She would also elaborate her submission by contending that enforcement authority at the time of inspection called upon the petitioner - establishment to produce the records which admittedly was not produced on account of non availability and even after one year thereafter, said records were not produced and those registers which were produced has been referred to in the order dated 24.1.2009 and on account of entries in these documents being doubtful as discussed in the order passed under Section 7A, same has not been taken into consideration and as such, she contends that there is no infirmity in the order. She has also brought to the notice of this court that report of the

9 Enforcement Officer dated 24.4.2007 which bears the signature of the Manager and two other officials of petitioner establishment who admittedly in token of the names recorded by the Enforcement Officer affixed their signature and as such, she contends that writ petition be dismissed. 7.

Having heard the learned advocates appearing for the parties and on perusal of the impugned order, it is noticed that Enforcement Officer visited the petitioner establishment on 24.4.2007 to examine as to whether petitioner establishment is to be brought within the coverage of EPF & MP Act, 1952 and while conducting survey, Enforcement Officer called upon petitioner establishment to produce the attendance register and the wage register which would be maintained in the course of the business.

However, the officials present at the petitioner establishment pleaded their inability to produce the said registers on the ground of non-availability and

10 same being in the custody of their auditor. In this factual background, the enforcement officer called upon the employees who are present at the time of visit to disclose the names of the employees, employed in the petitioner establishment. As per the Enforcement Officer’s report, there are twenty-two names. After having recorded the same, it is signed by three officials of the petitioner establishment namely Sriyuths: (1) M.Usha (2) Narayana Swamy; and (3) Mahadeva Naik This report of the Enforcement Officer is dated 24.4.2007. Subsequently, notice was issued to the petitioner on 10.4.2008 stating that on 2.5.2007 records were not submitted by the petitioner. Thereafter, one more letter was issued on 23.5.2007 calling upon the petitioner establishment to submit the records. Even then it was not produced. This was followed by other letters and petitioner establishment neither produced the records nor appeared before the

11 authority for enquiry. Having failed in its attempt to secure the presence of the petitioner establishment, authorities issued notice on 5.11.2008 to M/s. Bharath Petroleum Corporation, Customer care centre, Bangalore under whom petitioner is a dealer and in response to it the Assistant Manager, LPG Sales, BPCL attended the enquiry and intimated the authorities that distributors namely the petitioner establishment has been informed to comply with the show cause notice issued by the department. It is thereafter i.e. on 5.11.2008 for the first time, petitioner establishment appeared before the respondent authority. Even on the said date no records were produced before the enquiry officer and as such it came to be adjourned to 4.9.2008. In the enquiry nine documents were produced by the petitioner establishment.

It is the contention of Mr.Narasimhaswamy that attendance register produced along with these documents has not been considered or examined by the first respondent authority and to contend that there were only 17

12 employees in the petitioner establishment he has brought to the notice of this Court entries found therein. Though this court in writ jurisdiction would not examine such a contention which is based on factual matrix, this court being court of record and the original records being made available by the learned counsel for respondent same has been examined by me. Xerox copy of the extracts of the attendance register which is produced on 26.11.2008 no doubt contain 17 names. The said attendance register is not counter signed either by the employer or by the Manager or counter signed by any statutory authority so as to accept the credibility of entries found therein and authenticity of the same. The burden is on the employer to discharge that as on given date, it did not have on its rolls more than 20 employees. The employer has to produce cogent evidence before the authority to dispel the said report dated 24.4.2007 is contrary to facts. Thus, the respondent authority having noticed the production of attendance register refused to take

13 cognizance of the entries found therein to arrive at a conclusion that there are 17 persons in the petitioner establishment and rightly so. It was also contended by petitioner that they do not possess any lorry so as to employ a driver, in its reply dated 24.2.2009 (letter is found at page 58 of the original records). But in the income tax returns filed by them which also came to be produced would reflect that petitioner establishment is possessing a lorry and as such, driver of the said lorry has been brought as one of its employees by the Enforcement Authority in the report dated 24.4.2007. Thus, burden casts on the petitioner to produce material to convince the authorities that names found or recorded by the Enforcement Officers are not the employees of the petitioner establishment has not been discharged. In that view of the matter, contention of the petitioner cannot be accepted. 8. It is to be further noticed that name of Sri M.R. Onkarappa has been taken into

14 consideration as one of the employees by the authorities, which fact was erroneous inasmuch as document produced before the respondent by the petitioner – establishment includes the name of Sri.M.R.Onkarappa, a practicing Advocate who has extended legal consultancy and assistance to petitioner establishment. He has raised bills in the successive months, which have been taken note of by the authority to arrive at a conclusion that he has been paid salary. The said bills relate to retainer fee and it cannot be held or construed as salary paid to him. This finding is erroneous and contrary to records. Smt. Nandita Haldipur would also fairly admit that in view of the said fact Sri.M.R.Onkarappa, cannot be held to be an employee of petitioner establishment and to the said extent, the conclusion arrived at by the respondent may not stand the test of scrutiny. However, Even excluding said Sri.M.R.Onkarappa from the list of employees of petitioner establishment it still boils down to the fact that there are 22 employees in the petitioner

15 establishment. The affidavits of the employees filed before appellate authority has been taken into consideration and same has been rejected by the appellate authority after having considered the said affidavits and rightly so for two reasons: (1) The contents of the affidavits are contrary to records; and (2) Nothing prevented the petitioner establishment either to examine him before the respondent authorities. Thus, it is seen petitioner has been making attempts to improve its case stage by stage and step by step by producing the records in installments. If really petitioner was in possession of such records nothing prevented it from producing in 7A proceedings at the earliest stage. In view of the facts that these records are not counter signed either by the employer or any other authority makes it difficult for being accepted and as such entries found therein has to

16 be seen with utmost circumspection. In view of the same finding given by the Appellate Authority for not taking into consideration the affidavits of those employees who claim to be not on the rolls of the petitioner establishment cannot be found fault with. I do not find any good ground to interfere with the said finding of the Appellate Authority. In so far as the wage register which the petitioner claims to have produced and not considered by the respondent authorities are concerned, is also without any merit. The said wage register has been examined by the authorities and rejected for reasons aforesaid. Admittedly, in the Annexure appended to the income tax returns filed for the relevant assessment year, salaries paid to them have been reflected. However, no supporting documents to demonstrate that there were only 17 employees in the establishment has been produced by the petitioner and the said wage register extract also does not form part and parcel of the income tax returns. In the absence of any cogent and convincing material made

17 available before the respondent authority by the petitioner establishment that it had employed less than 20 employees it cannot be said that respondent authority committed an error in arriving at a conclusion that petitioner establishment is to be covered under the provisions of the EPF & MP Act. In view of the same, I do not find any good ground to interfere with the order impugned herein. Hence, Writ Petition stands rejected. No order as to costs. In view of Writ Petition having been disposed of, I.A.No.II/2012 does not survive for consideration and the same is hereby rejected. Sd/- JUDGE PL